If you are ready to purchase a home and know that the FHA loan is one of your top options for financing, it is beneficial to use the FHA mortgage calculator before you start shopping for a home or a loan. The calculator can help you figure out what you will owe on the home should you go the FHA financing route. Because FHA loans are not just for first-time homebuyers, everyone can use this calculator to see if an FHA loan makes sense for their situation. If you are unsure whether or not you should check out FHA financing as an option, here are a few reasons to use the calculator.
Understand the FHA Mortgage Insurance
One of the most important reasons to use the FHA mortgage calculator is to determine the mortgage insurance you will be required to pay. There are two types of insurance: upfront and annual mortgage insurance. As the name suggests, the upfront mortgage insurance gets paid at the closing while the annual insurance is divvied up into your monthly payments. When you use a calculator with your actual loan amount, appraised value, and down payment, you will get an accurate number for the mortgage insurance to help you avoid any surprises down the road. When you see how much the mortgage insurance costs, you can determine if you want to stick with the price range that you were looking at when shopping for a home or if you need to lower it to make your payment more affordable.
Play with the Numbers
The FHA mortgage calculator also enables you to play with the numbers of your loan. For example, if you have more money on hand to put down a down payment larger than 3.5%, you can see how it would affect your payment. If the payment will get low enough to make a drastic difference on your monthly payment, it might be worth it for you to put the extra money down. You can also use this calculator before you are ready to start shopping for a home, but are thinking about buying your own home. It can give you an idea of the amount of money you will need to save up so that when you are ready, you can get approved for an FHA loan.
Save you Time
Wouldn’t you rather know what you can afford before you start shopping for a home? What if the price range you thought you would be okay in turns out to be more expensive than you anticipated? If this is your first mortgage, you might not realize what goes into the mortgage process and how your payment is affected. Being armed with the information beforehand can help you stick within the right price range, saving you time and heartache if you were to find a home that you could not afford but really loved. The FHA calculator only takes a few quick seconds to navigate, giving you a good idea of what you could afford without any hard work.
The FHA calculator offers valuable information to those that are ready to shop for a home or even those just thinking about it. When you know what you will have to pay, how your down payment affects the outcome, and what price range you need to stick with, you will know what you are getting yourself into and arming you with the information you need to make solid financial decisions.